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- Certain production equipment used by Dayton Mechanical has become obsolete relative to current technology. The company is considering whether it should keep or replace its existing equipment. To aid in this decision, the company’s controller gathered the following data: (See attached) c. What is the total dollar amount of all relevant costs to the equipment replacement decision. $______ d. What is the total dollar amount of the opportunity costs associated with the alternative of keeping the old equipment? $______Government had recently declared certain policy changes to setup and run heavy industries. The company have to obtain no-objection-certificate from National Green Tribunal to run the unit. A company XYZ engaged in manufacturing cement is searching to relocating their manufacturing facility. Explain various factors that cement company should consider while taking location decision, also explain how these factors will affect the bottom line of the company.Technical feasibility analyzes the availability of technology and resources. This type of analysis helps companies determine whether new technology is feasible or not. It is used when new technology is first developed, prior to use. Machinery and Office equipment(building materials company)
- (Analysis of Alternatives) The Black Knights Inc., a manufacturer of low-sugar, low-sodium, low-cholesterol TV dinners, would like to increase its market share in the Sunbelt. In order to do so, Black Knights has decided to locate a new factory in the Panama City area. Black Knights will either buy or lease a site depending upon which is more advantageous. The site location committee has narrowed down the available sites to the following three very similar buildings that will meet their needs. • Building A: Purchase for a cash price of $600,000, useful life 25 years. • Building B: Lease for 25 years with annual lease payments of $69,000 being made at the beginning of the year. • Building C: Purchase for $650,000 cash. This building is larger than needed; however, the excess space can be sublet for 25 years at a net annual rental of $7,000. Rental payments will be received at the end of each year. The Black Knights Inc. has no aversion to being a landlord. Instructions In which…Select a manufacturing organization (Toyota Motors) for justifying "Companies with labor incentive manufacturing processes are most likely to benefit from sending manufacturing operations overseas because the bulk of potential cost savings relate to labor costs". Identify relevant and irrelevant costs and benefits in a decision. Prepare an analysis showing whether a product line or other business segment should be added or dropped. Determine the value of obtaining the constrained resources. (Note-MANUFACTURING ORGANIZATION- Toyota motors)Consider the following series of independentsituations in which a firm is about to make a strategic decision.Decisionsa. Julian Phones is about to decide whether to launch production and sale of a cell phone with standardfeatures.b. Flint Computers is trying to decide whether to produce and sell a new home computer softwarepackage that includes the ability to interface with a thermostat and a refrigerator. There is no suchsoftware currently on the market.c. Maria Cosmetics has been asked to provide a “store brand” facial cream that will be sold at discountretail stores.d. Jansen Computers is considering developing a special line of computers that can be both a tablet anda computer.1. For each decision, state whether the company is following a cost leadership or a product differentiationstrategy.2. For each decision, discuss what information the management accountant can provide about the sourceof competitive advantage for these firms.
- Without regard to costs, identify the advantages to QualSupport Corporation of continuing to obtain covers from its own Denver Cover Plant. QualSupport Corporation plans to prepare a financial analysis that will be used in deciding whether or not to close the Denver Cover Plant. Management has asked you to identify: The annual budgeted costs that are relevant to the decision regarding closing the plant (show the dollar amounts). The annual budgeted costs that are irrelevant to the decision regarding closing the plant and explain why they are irrelevant (again show the dollar amounts). Any nonrecurring costs that would arise due to the closing of the plant, and explain how they would affect the decision (again show any dollar amounts). Looking at the data you have prepared in (2) above, what is the financial advantage (disadvantage) of closing the plant? Show computations and explain your answer. Identify any revenues or costs not specifically mentioned in the problem that…SYSTEMS SELECTION Your company. Kitchen Works, is employing the SDLC for its new information system. The company is currently performing a number of feasibility studies, including the economic feasibility study. A draft of the economic feasibility study has been presented to you for your review. You have been charged with determining whether only escapable costs have been used, the present value of cash flows is accurate, the one-time and recurring costs are correct, realistic useful lives have been used, and the intangible benefits listed in the study are reasonable. Although you are a member of the development team because of your strong accounting background, you have questions about whether some costs are escapable, the interest rates used to perform present value analysis, and the estimated useful lives that have been used. How might you resolve your questions?NextG Limited is a leading manufacturer of automotive components. It supplies to the original equipment manufacturers as well as the replacement market. Its projects typically have a short life as it introduces new models periodically. You have recently joined NextG Limited as a financial analyst reporting to Mr. Atiamoh, the CFO of the company. He has provided you the following information about two mutually exclusive projects. A and B, that are being considered by the Executive Committee of NextG Limited:Project A is an extension of an existing line. Its cash flow will decrease over time. Project B involves a new product. Building its market will take some time and hence its cash flow will increase over time.The expected net cash flows of the two mutually exclusive projects are as follows. Mr. Atiamoh believes that all the two projects have risk characteristics similar to the average risk of the firm and hence NextG’s cost of capital of 10 percent will apply to them and both…
- Equipment replacement decisions and performance evaluation. Susan Smith manages the Wexford plant of Sanchez Manufacturing. A representative of Darnell Engineering approaches Smith about replacing a large piece of manufacturing equipment that Sanchez uses in its process with a more efficient model. While the representative made some compelling arguments in favor of replacing the 3-year-old equipment, Smith is hesitant. Smith is hoping to be promoted next year to manager of the larger Detroit plant, and she knows that the accrual-basis net operating income of the Wexford plant will be evaluated closely as part of the promotion decision. The following information is available concerning the equipment replacement decision: Sanchez uses straight-line depreciation on all equipment. Annual depreciation expense for the old machine is $180,000 and will be $270,000 on the new machine if it is acquired. For simplicity, ignore income taxes and the time value of money.You are the president of AMT Enterprises. You have the opportunity to expand your product line to include a new semi-conductor wafer fabrication line. In order to produce the new wafer, you must invest in a new production process. In addition to doing nothing, two mutually exclusive processes are currently available to produce the wafer. Should you produce this new wafer? In other words, which, if either, of the alternative processes should be chosen? Note: IRR for Alternative I = 15.7 %, and IRR for Alternative II = 15.6%. Assume that the capital investment for each alternative occurs at year 0 and that the annual revenues and expenses first occur at the end of year one. Use the incremental IRR method to justify your decision. Your company’s MARR is 15%.Planning and control decisions. Gregor Company makes and sells brooms and mops. It takes the following actions, not necessarily in the order given. For each action, state whether it is a planning decision or a control decision. Gregor asks its advertising team to develop fresh advertisements to market its newest product. Gregor calculates customer satisfaction scores after introducing its newest product. Gregor compares costs it actually incurred with costs it expected to incur for the production of the new product. Gregor’s design team proposes a new product to compete directly with the Swiffer. Gregor estimates the costs it will incur to distribute 30,000 units of the new product in the first quarter of next fiscal year.
